Health Insurance for American Travelers

[singlepic=1668,250,,,right]There are many fun steps in preparing for your career break travels, and planning for health insurance issues is not one of them. However, it is probably the most important issue you should pay attention to, especially for Americans.

Keith and Amy Sutter have successfully made the transition from briefcase to backpack. They are currently traveling the world while documenting efforts in environmental sustainability on their blog, Green Around The Globe. They share with us how Americans must navigate a complex process to get health insurance while traveling around the globe.

Second only to our salaries, health insurance was the most valuable component of our employer-provided compensation before we made the leap from briefcase to backpack. Walking away from the relative simplicity of employer-provided health benefits was fraught with forms, confusion and seemingly endless options. Tempting as it was, throwing our hands up and foregoing health coverage was not an option. Going without health insurance seemed riskier than riding a motorbike through downtown Hanoi at rush hour blindfolded, not something either of us want to do. By detailing our experiences throughout the process of obtaining health insurance coverage for our career break we hope to share what we learned and make the process a bit easier for you.

Private health insurance in the United States is a quagmire of benefit statements and long medical history applications. We quickly found this out when we began researching our options. As this was the first time we would not have employer or university-provided group health benefits, we had to start from scratch. We quickly discovered the world of travel insurance.

TRAVEL INSURANCEThere are many reputable travel insurance companies out there that offer great coverage while traveling abroad. As an American, however, you must keep in mind that most of these plans will not cover you within the United States and many of these plans are not recognized as “creditable.” “Creditable coverage” is defined quite broadly and includes nearly all U.S. group and individual health plans. But despite the broad definition nearly all travel insurance is NOT deemed creditable coverage. One notable exception is HTH Worldwide’s Global Citizen, which is underwritten by A-rated insurance companies licensed by each State’s department of insurance as admitted carriers. The trick here is that depending on what state you live in you may need to go through underwriting in order to obtain coverage.

UNDERWRITING
[singlepic=1669,200,,,right]If you live in a state that allows health insurance companies to send your application through the underwriting process, your first step after choosing an insurance provider is to complete a very long application detailing ALL of your medical history, including every doctor, prescription and over-the-counter medication you have taken for the last 5 years. Take ibuprofen for headaches? Remember that sinus infection four years ago? Or that ingrown toenail you had taken care of a few months back? And of course, there is the catchall question at the end of the application wanting to know if you have EVER been to a doctor, been admitted to a hospital or taken prescription medications. All of this information must be painstakingly detailed in your application. Forget a piece of your medical history and the insurance company can later challenge your claim and even deny you coverage.

The underwriting department of the insurance company will review your completed application, and if you are determined to be an acceptable insurance risk you are eligible for coverage. If you are deemed to be an unacceptable insurance risk, as we were, your application will be denied and it’s time to explore other options.

Our next step after failing underwriting in Pennsylvania was to move our legal address to New Jersey, which prohibits insurance companies from denying coverage or charging higher rates based on underwriting. As we are currently renting out our home in Pennsylvania while abroad, we were able to change our residency, get New Jersey driver’s licenses and officially move in with Amy’s mother, who luckily happens to live in New Jersey and had already volunteered to receive our forwarded mail. Once we had a legal mailing address in the Garden State we became eligible for health insurance issued under New Jersey’s more favorable underwriting regulations.

Going without health insurance seemed riskier than riding a motorbike through downtown Hanoi at rush hour blindfolded, not something either of us want to do.

WHY GET US COVERAGE WHILE ABROAD?You might be asking yourself, if getting private health insurance policy is so difficult, why not just get travel insurance while traveling and then get a private policy when you get home? There are two reasons. The first reason is that you might unexpectedly end up sick or injured and back in the United States having not transitioned from backpack back to briefcase and the world of employer-provided health coverage. And even if you have travel insurance, the chances are that if you need to use it, it’s for the emergency medical evacuation coverage, which provides coverage in the event of a serious illness or injury that requires medical treatment that cannot be provided where you are when you get sick or hurt. If the closest appropriate medical care is back in the United States, that’s where you’ll end up. And even if you are initially transferred somewhere else, if the illness or injury requires long-term care, you’ll most likely return to the United States to receive that care. Unfortunately, most travel insurance policies end as soon as you land on U.S. soil and any medical treatment that you receive once at home will all be out of pocket. The second reason to get U.S. coverage while abroad is the preservation of continuous coverage.

CONTINUOUS COVERAGEWhen you terminate your current U.S. creditable health insurance coverage, you only have a window of 63 days to get new health insurance coverage from a creditable provider before preexisting condition exclusion periods become effective. This means that you can no longer use past coverage to offset preexisting condition exclusion periods, which can be as long as 12 months. For example, if you have ever sought treatment for back pain in the past, you can be denied coverage for any back pain related treatment for as long as the first 12 months of coverage under your new insurance policy. This essentially boils down to the fact that as an American, you need to have creditable coverage with no gaps greater than 63 days to ensure coverage in the future. And again, most travel insurance does not qualify as creditable.

WHAT WE DID
[singlepic=1671,200,,,right]After drowning in the fine print while trying to figure out what to do for health insurance, we hired a professional health insurance broker to help us figure out the right plan for us. Over the course of several months of research the three of us ultimately found that the best fit was to carry two separate insurance policies – one travel policy and one very basic but creditable domestic policy. For a total annual cost of $7,648, we went with World Nomads for our travel insurance policy ($1,036 annually) and Horizon Blue Cross Blue Shield of New Jersey Basic and Essential EPO Plan (even the name is long and confusing) for our domestic insurance policy ($6,612 annually). It’s a lot of money for something we hope we never to have to use, but for us the peace of mind is worth it.

Helpful DefinitionsCreditable Coverage: Health coverage of an individual under a group health plan (including while on COBRA continuation coverage), individual health insurance coverage, Medicare, Medicaid, a state health benefits risk pool, a public health plan, and certain other health programs. May be used to offset time from any pre-existing condition exclusion if no significant break in coverage (generally 63 days) happened before starting a new group health plan.

Underwriting: Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to acquire—or to “write”—business that will make the insurance company money, and to protect the company’s book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing insurance policies.

*Disclaimer: The information provided here is for informational purposes only. Keith and Amy Sutter are not licensed insurance brokers or sales people. You should consult a professional insurance broker or salesperson to best determine your health insurance needs.

Other comments

Excellent information. Thanks for sharing Keith. It’s sad that so little information for long-term traveling Americans exists our there.
As I transitioned to ‘backpack’ this was the one task that brought me to tears. I had been employed my whole career and had taken insurance for granted for the last 14 years. It’s terribly confusing and for Americans it’s frustrating to try to figure out. I’ve been lucky that I’ve never had to actually file a claim with any of my insurance companies in the last 3 1/2 years of travel and living abroad. I did recently join HTH Global Citizens though and I like what they offer- coverage in the US and abroad.

Wow, that seems like a real headache. We are in Canada and have different coverage, but it is good information for everyone in any country to be sure to know if you will be covered when you get home.
In Ontario, Canada, we can leave the country for 7 months before our OHIP coverage expires, then we have to wait 3 months for it to become renewed.
I don’t know if World Nomads covers that 3 months, so it is a good heads up for us to look into that when we buy our policy. We are planning on going home before our 7 months, just so we don’t have to deal with it (and do our taxes:)It is worth it for us to keep going home and then traveling again because we have free health coverage in Canada and with our travel policy that we have from our film union, we have free health coverage abroad as long as our OHIP is in good standing.
Seeing the amount of money that you have to pay, it is worth the price of the flight for us to go home for a bit.
Excellent info, thanks.

[…] ceiling unable to sleep. On the upside, I was incredibly productive all day. I helped Amy write a guest blog post for Briefcase to Backpacker, edited and uploaded pictures from Indonesia and finished reading my latest book, When Broken Glass […]

Ben on Wed, 17th Feb 2010 8:10 pm

Health insurance is a scam. They take your money – enough to buy 2 around-the-world tickets every year – and give you nothing. When things hit the fan you’ll find the coverage you thought you had doesn’t cover this or that or has some strange exclusions, or they run you through the “we never got your paperwork” treadmill till some deadline has passed. Your payments go to pay lobbyists to prevent healthcare reform.

Going without health insurance is nothing like blind-folded motorcycling. No one will refuse you service because you don’t have insurance. Worst case scenario you get hit with a big medical situation and have to declare bankruptcy and move on.

Let bankruptcy law be your health insurance. Spend all your money traveling the world so that it’s that much easier to declare bankruptcy should you need to 😉

Ben – bankruptcy as health insurance is one approach, but not one that will work for everyone. It is true that while in the U.S. you will not be denied life saving care in the event of an emergency. However you will not be granted access to the best care, doctors or treatment either. Also to your point of insurance companies not paying on claims, I can personally attest that Aetna, one of the largest plans in America, covered 100% of the costs for my wrist reconstruction surgery after I shattered it in a snowboarding accident 2 years ago, with no hassle at all.

Also, unlike you, Amy and I do not intend to travel forever. We are taking a 1 year sabbatical to recharge and shift the directions of our careers. As such we have assets (house, bank accounts, etc) that we need to protect. We shared this information to help that vast majority of people out there that will travel for a set amount of time and are looking to transition back to a more traditional life with as little pain as possible.

Also not sure if you are aware of the huge problems that declaring bankruptcy comes with. For example you will have difficultly getting credit cards, making purchasing plane tickets rather difficult. Bankruptcy is not something that most people should not take likely. Thanks for your comment and hope that you stay in great health while traveling.

This is a good, rational discussion of the issues involved. It’s a shame that insurance is so blasted expensive though. $6,612 is roughly 20% of what we budgeted for our entire year-long trip (add in the travel insurance and you’re approaching 25% of the cost of the trip). There’s no reason it should be that expensive, and I refuse to pay that out of principle. We looked into various options and in the end, legally changed our address to Idaho (my girlfriend’s mother lives there) where we could get a catastrophic policy ($5,000 deductible) for $150 a month for the two of us. There needs to be cheaper options for health insurance – paying $500 a month (or more) is just ridiculous. And, I don’t mean to inject politics into this comment, but if you think Obama’s health plan will improve the cost situation, I think you’re in for a surprise. Elimination of catastrophic plans (as I understand it, you won’t be able to get ones like what we have in Idaho) is one of the real downsides of his plan. There will not be any cheaper options for people who are just looking for peace-of-mind like you say. Paying $500 or $600 is not peace-of-mind, it’s more like pre-paying for your care.

Wow, reading this (6 months later), I’m kinda glad I gave up on health insurance when we got back from our RTW! We choose to be “self-insured” – putting the $1K+ per month it would cost to insure our family of 4 into savings instead made more mathematical sense to me. Plus we have access to some pretty deep lines of credit (and a willingness to seek treatment overseas) if necessary.

There are some really good points and ideas here – important stuff a lot of people don’t think about. I’d like to see more more articles about “insurance hacking”!

One thing I learned in my travels is that outside the USA & a few other western countries, the vast majority of the world’s population gets by just fine without health insurance. I also noticed that countries with no health insurance industry have the lowest healthcare costs.

I think maybe as Americans we have a somewhat distorted view of healthcare (and definitely an exaggerated perception of risk). I know it’s a real hot-button issue for a lot of people, so I usually stay out of it.

But as you pointed out, it’s important to keep in mind that there are many ways to deal with this. Like other aspects of long-term travel, a little persistence and ingenuity can overcome what to many seems like an insurmountable obstacle.